Nike's Value Chain

STRENGTHS

Strong management team and good corporate strategy in both North American and overseas markets

First movers advantage in e-commerce

Brand recognition and reputation

Trademark "Just Do It"

Diversity and variety in products offered on the web (footwear, apparel, sporting equipment, etc.)

Strong control over its own distribution channel

Strong customer base

Strong financial position with minimal long term debts

Innovative designs in footwear enabling consumers to design their own shoes online

Brand reputation and recognition

Diversity and variety in products offered on the web (footwear, apparel, sporting equipment, etc.) Adidas even offers items not available in its retail stores

Emerging brand name

Pricing strategy is competitive to Nike's

Merger with Salomon will allow Adidas to gain a strong foothold in the Skiing Industry

Secondary web sites (i.e. soccerevolution.com to simply promote soccer, Adidas leads the market in this sport)

WEAKNESSES

Negative image portrayed by poor working conditions in its overseas factories

E-commerce is limited to USA

The direct sale to consumers is creating conflicts with its own resellers

Currently available supply chain, manufacturing, and fulfillment technologies aren't easily integrated with online build-to-order Not known for its research and development leading to innovative designs„«systems

The e-commerce is limited to USA, however, has planned to expand to Canada and international in the near future

Online customer service not "helpful" or easy to find

OPPORTUNITIES

Increasing demand in the industry for products available online

Increase female participation in athletics

E-commerce will reduce the cost of goods sold thus improving the "bottom line"

New technology and innovation to stay on top of market needs

Expand e-commerce to global markets

Possibility of outsourcing the web development and e-commerce to a third party developer

Growing interest in the sport of Basketball. Partnering up with other retailers to sell basketball footwear and apparel

Growing reputation in non-basketball sports will boost e-business

E-commerce will reduce the cost of goods sold thus improving the "bottom line"

Expand e-commerce to global markets

Collaborate with other online retailers to offer Adidas products

THREATS

Negative image due to "sweatshops"

Economic downturn in North America and Asian Countries

Increase in the price of providing technological solutions (e-commerce)

Strong competition from some of its major challengers in all branches of the business

Continuing challenges in import/export duties

Negative image created by the sponsored athletes (i.e. Kobe Bryant and his sexual assault case)

Increase in the Price of Raw materials

Nike's strong reputation in the footwear and apparel industry

Continuing challenges in import/export duties

Threats to free trade and foreign currency fluctuations

Possibility of distress from growing beyond its capabilities

Losing serious ground to Nike in the Soccer industry, which Adidas has a stronghold on

Emerging competitors

Both Nike.com and Adidas have strong positions in the footwear and apparel industry. Integrating e-business to its existing line of business is a key advantage to both companies relative to its competitors. For Nike, to overcome the potential threats, they must continue to be innovative and explore opportunities globally. Furthermore, Nike must focus their energy towards reducing the channel conflict caused by the introduction of e-commerce to Nike's strategy. Nike.com must balance out its efforts to reassure traditional retailers while expanding its own line of business through e-commerce. Very similar to Nike, for Adidas to overcome some of the potential threats they must continue to improve their strategic position in the industry by increasing their e-commerce reach to the global markets. For both companies, it's important to increase the market "pie" rather than increase their market share away from their retailers. Furthermore, the information, such as demographics and preferences, collected from directly selling to the end consumers should be used to market new goods and products.

PORTER'S FIVE FORCES

Barriers to Entry - Low

Due to the large scale of both Nike and Adidas, these firms are able to control their costs to retain performance advantage over emerging competitors in the industry. Their web sites are more sophisticated and enticing to browse, both contributed to their large marketing budgets. The capital injection into web site development is high and